Financial Services and Markets Bill

Andrea Leadsom Excerpts

2nd reading
Wednesday 7th September 2022 Commons Chamber

[Dame Andrea Leadsom (South Northamptonshire) (Con)]

I would like to begin by paying huge tribute to my hon. Friend the Member for Salisbury (John Glen), who in four and a half years as Economic Secretary to the Treasury achieved an enormous amount, and the Bill is testament to his huge commitment. It was a pleasure to deal with him on many issues in that period. Having done his job briefly for one year, I can absolutely understand what a huge commitment it was for him. I am torn, however, because I absolutely love the new Minister, with whom I have worked as a Back Bencher on many issues in finance. It is great to be in the Chamber and to be able to contribute to the debate.

Enough of the nice stuff. I think the Bill is essential and deals with a big area. People talked so much nonsense in the Brexit debate—“Oh, the City of London is going to collapse!” I remember going to a Dubai international conference where Xavier Bettel, the Prime Minister of Luxembourg, said, “Well, if the UK leaves the EU, the City of London will move to Luxembourg.” I remember thinking in my jet-lagged brain, “Surely, you could not fit just over a million people in Luxembourg. The queue for the coffee shop would go down the street.” There was so much nonsense, and the Bill is absolutely brilliant and long overdue. It is time that we took control of the City of London and its competitiveness. It is high time that it had a competitiveness objective and that we took advantage of this perfect opportunity to be the leader in the world in setting out financial regulation and in exporting to countries across Asia, where people cannot get mortgages or insurance and all those sorts of policies that we take for granted, which we can buy and regulate in the west. Leading regulation in finance around the world is absolutely critical.

Another huge opportunity for the UK is being the world’s leading green finance centre. My first question for the Minister is what are we doing about that? Is it in the Bill? In my view, it will happen. I think that the green industry is going to be an even bigger employer and an even bigger jewel in the crown than the financial services sector in future, but we should seize the opportunity to make that happen as soon as we can. Mutual recognition agreements are absolutely vital. Having left the EU, we have the freedom to make them, but will the Minister explain how those MRAs will be scrutinised by the House. That is a technical question—I am sure that there is already an answer to that.

Moving on from competition, which is at the heart of this measure and absolutely vital, to payments, I recall from my days on the Treasury Committee from 2010 to 2014, and then as City Minister, how dire our payment systems are, mainly because they have been around for a long time, held together with string, Sellotape and sealing wax. Someone said, slightly bravely, that we should feel sorry for the banks—never feel sorry for the banks—but nevertheless, it is their own doing that the ancient payment systems are very clunky. A lot of fraud today is the result of payment systems not being fit for purpose. Again, will the Minister explain whether there is a requirement in the Bill to improve payment systems and make them more robust? Will banks, particularly clearing banks, invest in those systems? How will new digital currency regulation interact with fiat money regulation and what protections will there be for people who, unfortunately, become victims in the digital money space? How will we protect them from fraudsters who claim that they are regulated by the Bank of England or the FCA? What are we doing about that? Have measures been written into the Bill?

On access to cash, back in the day, after the financial crisis, the big banks wanted to ditch cheques, for example, because they could not see the point of them. They were expensive to administer, but as MPs we know that many of our constituents rely on cheques to this day. Only recently, my daughter was sent a cheque and tried to cash it. People literally cannot do that unless they go to a bank. Otherwise they have to fill it in, take a photo of it and send it to the bank in an envelope with a stamp. That is absolutely ridiculous, as there are many people who depend on cheques.

What are we doing in the Bill to continue to protect access to cheques and, as others have said, access to free cash through ATMs? Those are disappearing at a rate of knots. As the last bank in town has started to close, post offices have picked up a lot of the slack, but that system is waning. A lot of the services that small businesses need are not available through post offices, and of course it is difficult for someone who is not digitally savvy to open a new bank account other than by going to a branch, which can be difficult for older people.

My final point is about credit unions. I am a big fan—always have been. What I love about them is that they teach people to save before they borrow. Like many co-operatives, credit unions have been great at reaching out to schools and teaching young people about the importance of saving and the fact that money does not grow on trees, so they get into the habit of saving their pocket money before they go out and start borrowing money for anything. As has been mentioned, a lot of Government money went into helping the Association of British Credit Unions to create a new, proper platform for credit unions. How is it doing? How is the co-operative movement doing? Is there anything in the Bill that will support not just those co-operatives but, vitally, financial education in schools?

Let me finish by saying that it seems to me that, although financial education is on the national curriculum, it would be so much more valuable to so many young people to know how to open a bank account, what a rental agreement is about, or how to fill out a mortgage form, a tax return or a credit agreement than to learn more geometry and the square root of nine.

Financial Services and Markets Bill

Andrea Leadsom Excerpts

Report stage
Wednesday 7th December 2022 Commons Chamber

[Dame Andrea Leadsom (South Northamptonshire) (Con)]

Will my hon. Friend give way?

[Andrew Griffith]

I was just about to mention my right hon. Friend.

[Dame Andrea Leadsom]

The Minister and I had a very good conversation about this very subject. He is aware that back in the days of a former Treasury Committee and an earlier Government, there was a huge move away from ATMs per se, let alone free access to people’s own cash. Can he therefore make it clear at the Dispatch Box what he said to me, which is that the Government are entirely behind free access to cash and will make that clear in the guidance?

[Andrew Griffith]

My right hon. Friend is just one of many colleagues—many in the Chamber today, but also my hon. Friends the Members for Newton Abbot (Anne Marie Morris) and for Don Valley (Nick Fletcher)—who have made precisely this point. It is the Government’s expectation that the industry-led initiative must deliver. As I will come on to clarify, the powers we are taking in the Bill—we are not mandating them, because we do not support the amendment from the hon. Member for Mitcham and Morden (Siobhain McDonagh)—give us the flexibility in future, by means of a direction statement to the industry, to mandate free cash machines.

--- Later in debate ---

[Siobhain McDonagh]

rose—

[Dame Andrea Leadsom]

rose—

--- Later in debate ---

[Andrew Griffith]

I will try to respond to the hon. Lady’s points further when I sum up, so I can make some progress. We had that debate several times in Committee. We have to be slightly cautious about the unintended consequences of taking into scope a much wider set of transactions that involve an element of deferred payment, but I am sympathetic to her points.

I thank my hon. Friend the Member for Harrow East for raising the topic of a statutory duty of care for consumers. Ensuring that consumers of financial services get the right protection they need remains a priority. The FCA comprehensively analysed the options for improving that, which led to the consumer duty that will come into force in July.

The hon. Member for Bath (Wera Hobhouse) tabled new clauses 34 and 35 to require trustees of occupational pension schemes and fund managers to act in the best interest of beneficiaries, which is indeed the position as it stands today, although I will listen carefully to her points. Trustees and fund managers will be subject to the FCA’s consumer duty, which puts on them a focus of delivering good outcomes for customers.

I turn to amendments relating to frauds and scams. The Bill is a huge step forward in tackling the growing problem of authorised push payment scams. I will be clear that, as I set out in my response to the hon. Member for Hampstead and Kilburn in Committee, the Government are committed to tackling fraud far more widely than in just financial services. She may like to know that the Home Office has now confirmed that a national fraud strategy will be published early in the new year.

Specifically for financial services, UK Finance publishes a half-year fraud update, which sets out how the industry is working together to respond to the fraud threat and to support customers. In relation to the amendments concerning the reimbursement of victims of authorised push payment scams, the payment systems regulator has already signalled its intention to deliver a higher degree of consumer protection.

On sustainable finance, no Government have done more on the climate. We have legislated to reach net zero greenhouse gas emissions by 2050. We support strengthening the UK financial services regulatory regime’s baking in of the climate, as underlined by clause 25, which requires the regulators in discharging their functions to have regard to the need to contribute to achieving compliance with net zero. The regulators will be required to report annually on how they have considered that regulatory principle. That is a significant step in our goal of making the UK a net zero-aligned financial centre, and builds on our green finance and net zero strategies across the whole gamut of regulatory activity. The Government committed to updating our green financial strategy and will announce further information on timing imminently.

[Dame Andrea Leadsom]

I am delighted to hear that from my hon. Friend. Does he agree that that not just gives the UK a competitive edge but creates many new jobs and opportunities for the UK to lead the world in green finance, as well as other green industries in future?

[Andrew Griffith]

Absolutely; it is a strategy that pays back on many levels. It is biased towards left-behind communities and parts of the United Kingdom, it creates jobs and prosperity, it safeguards the prospects of the City of London and our financial and professional services and, of course, it ensures that we deploy capital in pursuit of the transition to a clean, low-carbon world.

Financial Services and Markets Bill

Andrea Leadsom Excerpts

Consideration of Lords message
Monday 26th June 2023 Commons Chamber

[Tulip Siddiq]

It is a similar story across my constituency. A Labour Government would give the FCA the powers it needs to protect essential in-person banking services, which would help a lot of the constituents the hon. Lady is talking about.

To be clear to the Minister, Labour is not calling for banks to be prevented from closing branches that are no longer needed. We recognise that access to face-to-face services could and should be provided increasingly through banking hubs, be they delivered at the post office, in shared bank branches or by other models of community provision. But so far, only four hubs—I repeat: only four—have been delivered. [Interruption.] The Minister is indicating that there are six, which I do not think is a massive improvement, but I will take it. Six banking hubs have been delivered, about which he seems very proud. Figures from LINK reveal that only a further 52 hubs are in the pipeline. On top of that, many of those planned banking hubs will not even provide the essential in-person services that I am speaking about, so although we welcome the progress made in Lords amendments 72 to 77, there is a lot more to do to ensure that no one is left behind.

I am disappointed that the Government have decided not to back Lords amendment 10 on financial inclusion, for which my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy) has been a powerful advocate. The amendment is an important opportunity to rethink fundamentally how financial resilience, inclusion and wellbeing issues are tackled in the UK, and to empower the FCA to confront issues such as the poverty premium—the extra costs that poorer people pay for essential services such as insurance, loans or credit cards.

Although I agree with the Minister that financial inclusion is a broader social policy issue, I do not believe that that is a legitimate argument for rejecting the Lords amendment fully. As the Treasury Committee found it its report last year:

“The regulations made by the FCA, and the manner in which it supervises and enforces those regulations, could have a significant impact on financial inclusion”,

such as restricting the practice of charging the poorest in society more for paying insurance in monthly instalments. That is why the Labour party will vote for Lords amendment 10.

Finally, I will address Lords amendment 5 on sustainability disclosure requirements, and the Government amendments tabled in lieu of Lords amendment 7 on expanding the regulatory principle on net zero emissions, and in lieu of Lords amendment 36 on forest risk commodities. We welcome once again that the Government have finally U-turned and acknowledged concerns that our regulatory system must play a role in protecting nature and ending deforestation. However, as I am sure the Minister will agree, that can only be the first step in ensuring that the transition to net zero and the protection of nature are primary considerations across the financial system. The Treasury’s review of deforestation must be meaningful and put forward concrete proposals. The Government cannot continue to kick the can down the road.

Similarly, although we welcome the new requirements in Lords amendment 5 for the FCA and PRA to have regard to the Treasury’s sustainability and disclosure requirements policy statement, we have been calling on the Government to move on that for months. Even now, the Government have yet to confirm the date on which the sustainability disclosure requirements will be introduced. We need clear timing and direction so that we give businesses the confidence to invest and do not undermine their certainty.

The Labour party will support the amendments. As I am sure the Minister knows, I will continue to hold him to account on his actions regarding green finance, financial inclusion and in-person banking services.

[Dame Andrea Leadsom (South Northamptonshire) (Con)]

May I start by sending my condolences to my fellow Treasury Committee member, the hon. Member for Mitcham and Morden (Siobhain McDonagh)? Her sister will be greatly missed by Members across all parties.

I am delighted at the Bill’s progress. I congratulate my hon. Friend the Minister on all his work in taking into account the views expressed across the House. Of course, the existence of the Bill is a huge Brexit dividend in itself, enabling us to deregulate while strengthening financial services in the UK, which is in the top two financial services sectors in the world and creates up to 2 million jobs right across the UK.

So far, the Treasury Committee has proven to be a good overview body for the financial services and markets regulation that is coming back to the UK. That Committee has done a great job, and I can say that without appearing to boast because I was not on the Committee when it did that scrutiny. We have done a good job, and the Treasury Committee will continue to be the right place to provide the scrutiny and checks and balances that will always be needed in the financial services sector.

I point out, however, that their lordships need carefully to consider their approach to the Bill. Far from enabling us to seize the opportunity and recapture the initiative, they seem to be trying to over-burden the regulators, pinning them down with reports and further obligations and duties that would militate against the UK continuing to be one of the most successful places on earth for financial services.

[Peter Grant]

As a counter to that point, is the right hon. Lady as concerned as I am about the fact that, as well as being a successful breeding ground for financial services businesses, the United Kingdom is now seen worldwide as one of the best places to commit financial fraud?

[Dame Andrea Leadsom]

The hon. Gentleman raises an extremely important issue. He will know that huge efforts are being made to clamp down on financial fraud. It has been an insoluble issue over many decades, and of course, with advances with technology and so on, scammers and financial fraud continue to be a big problem, but that does not detract from the fact that the UK is hugely successful in financial services. I predict that the UK will also be hugely successful in green financial services around the world, enabling the net zero transition to take place using UK expertise and exports in that crucial area.

I was delighted to see the new competitiveness and growth objective, and that the PRA and FCA will be required to provide reports on how well it is being addressed. The Treasury Committee has taken evidence from both organisations, which welcome the opportunity to focus not just on stability but on how it affects our competitiveness around the world. That is important and represents a big opportunity for UK plc.

The complaints function is a great initiative that will definitely address the absolutely valid concerns of so many constituents across the UK about the poor behaviour in some of the responses to inquiries led by the FCA or the PRA. That independent, Treasury-led complaints function will be very important.

It is vital that my constituents in South Northamptonshire can have access to cash, so I am delighted that an obligation to ensure that that remains the case will be enshrined in this legislation. I share the concerns of the hon. Member for Hampstead and Kilburn (Tulip Siddiq) about the closure of banks. The Government initiative to create a new arrangement for post offices to provide “the last bank in town” services was a good one. I wonder whether over time we can expand that, because the loss of banks continues to be a big issue.